Catarina's World

It looks like a historic transition in capitalism is unfolding as a result of products like the iPod.

Wonder if the young Steve Jobs knew he and Apple would start a new era? They reinvented the consumption experience from the viewpoint of the individual, at a fraction of the old cost. And now that consumers have bitten the apple, companies will have to adapt to the "iPod syndrome".

The world is constantly changing and I believe we are at the beginning of a new era which will fundamentally change the way we consume. New demands are created that the majority of companies are not yet able to satisfy.

During the time of Henry Ford focus shifted from the elite to the masses. Today however, we are moving from mass consumption to a new era catering to the wants of the individual. People want control over what matters to them, voice their opinion and have social connections on their own terms.

Mass production becoming less homogeneous
An good example is that you can order custom made sneakers from Nike. Many sectors are starting to distribute tailormade valued assets catering to individuals, hence enabling them to determine exactly what, when and how they consume.

Obviously this will change the basics of competition between companies as well as the boundaries between producers and customers. It just a question of how long it takes before almost all businesses will have to find ways to adapt to this new world in order to grow. Most likely we will order, for instance, our car online and decide all details such as what model, engine, gearbox, tyres and so forth it will have.

Companies that are able to create individualized ways to consume goods and services, preferably at a radically reduced cost, will prosper as they discover new sources of value that remain invisible to companies still bound by conventional business models and thinking.

Apple leading the way

The mass-production business model has come under assault during the past decade. An excellent example is, in my opinion,  Apple’s iPod and its music service, iTunes.

Apple rescued musical assets from a faltering business model, the compact disc, and bypassed the industry’s costly legacy systems and routes to the market. It enabled users to reconfigure their music as they saw fit. Apple is hence today the largest music retailer in the United States. But the reason for the success, which had been invisible to the music industry, was Apple’s ability to reinvent the consumption experience from the point of view of the individual, at a fraction of the old cost.

Identify the assets that represent value for each individual

The old focus of wealth creation worked from the perspective of the organization and its requirements. The new logic starts with the individual end user. Instead of “What do we have and how can we sell it to you?” good business practices will start by asking “Who are you?” “What do you need?” and “How can we help?” This inverted thinking will make it possible to identify what represent real value for each individual. And that’s how companies will make money.

Power really shifting from companies to consumers

The new sources of economic value can be discovered and realized only when consumption strengthens the sense of personal control, delivers opportunities for voicing ideas, and enables freely chosen social connections. The emerging logic of distributed capitalism will reward companies that realign their practices with the interests of the consumer and punish corporations that try to impose their own requirements or maximize their own benefit at the expense of the individual end user.

So what should executives do to ensure that their organizations will grow in this new world? For starters, it’s critical to question the old logic and vocabulary of competitive strategy. There will be an abundance of opportunities for companies that are able to decipher the emerging pattern and convert it into new business models that support the needs of the 21-century individual. Do you agree with me that the “iPod syndrome” will have a profound impact on all businesses and how we consume? If so, how do you believe the new consumer oriented capitalism will evolve? Will it take long before consumers are completely in control of what, when and how they consume? Obviously this new pattern will have a tremendous impact on the way we do business. How do you think companies will be restructured when we move from mass consumption to individual needs?

Photo: Flickr - Sigalakos